rhyme that they would do, and they would say ma, ma, where's my pa, pretending they were cleveland's orphaned love child. when cleveland finally wins the presidency, the democrats complete that little song by saying, ma, ma, where's my pa, going to the white house, ha, ha, ha. [laughter] sort of a democratic rejoinder. but what made it a scandal was this: grover cleveland's best friend and law partner was a guy named oscar folsom, and cleveland was born in new jersey and spent most of his career in buffalo, would become the mayor, governor of new york. but he was a very successful lawyer, and he and oscar folsom were law partners. and they practiced law together, they went out together, they would go out drinking and eating together, and it appears that they also enjoyed the services of maria together. so when maria gets pregnant, she has a son, and neither oscar folsom nor grover cleveland knew
who the father was. and maria complicates things by naming the child oscar clear lambed. now, oscar folsom had been married and had a daughter. cleveland was a bachelor, so cleveland kind of accepted responsibility to pay for the child to go to an orphanage, so forth and so on. but here's the other part of the scandal. oscar folsom dies a few years later in a carriage accident, driving his carriage a bit recklessly, he's thrown from it, apparently breaks his neck. he leaves a widow and this young girl, francis. grover cleveland makes an enormous amount of money, as his law partner, and cleveland kind of takes care of the widow and the young girl. he pays for them, sets them up in a nice home for his best friend and former law partner. he becomes the godfather, if you will, for the little girl, francis. they're very close. she calls him uncle cleve. he calls her frankie. he pays to send her to college
in a day in which women weren't really educated. what happened was as francis is growing up, cleveland's relationship with her changes from the godfather to a romantic interest. cleveland starts sending her letters with poems and sends her roses, and it's the full court press on courting her. >> you can watch this and other programs online at booktv.org. >> international financial diplomat william rhodes talks about the current economic and financial charges facing the economies of europe, japan, china and south korea. next on booktv. this is a little over an hour. [applause] >> okay. first of all, it's great to be back at the japan society, and we enjoy our relationship that way. tokyo, for the mcgraw-hill companies, has been the
headquarters of our asia pacific operations for 25 years now, and we enjoy a terrific relationship and a lot concern in a lot of different ways. one of many by colleagues is with me, doug peterson, who just joined us from citi, and he is heading up standard & poor's ratings, and we welcome you, doug. and doug has lived with citi all over the world and as such as lived quite a bit of time in japan itself. so it's great to be with you tonight as well, doug. let's see, in terms of this whole notion of the book, you know, by the way, it's a very modest title, banker to the world. [laughter] you know, when i heard of this -- and i'm a very close personal friend of bill's, like everybody in this room is, and so when testifies talking to me about this -- when he was talking to me about this concept of what he wanted to write
about, lessons of debt cry cease and all of this, i just knew that it was right in our sweet spot in what we needed to be able to do. so we were able to convince him, and so now i'm not talking to you as his friend, i'm talking to you as his publisher. [laughter] and we had this decision, you know, we were going to do this book, and we kid. and we did. now, the ink wasn't even dry on this book when henry kissinger came out and said this is a must read for anybody in any section and at any level of the finance industry. on that one. well, no sooner did he do that, okay? paul volcker came out and wanted to make a comment about how this is a must read, and it was a must read, and and he wanted to put a forward into the book, so we added the forward into the book. finish and then, and then we saw it again when steve forbes, another good friend, you know, was working on the european crisis at the time and was
trying to make sense of certain aspects, and he came out and said this is a must read for angela merkel, nicolas sarkozy and dave cameron. now, in my way of thinking he left out some southern european countries that might also have gotten something out of it. but it's easy to see why, you know, after you get a read of it, you know, why so many people need to know what bill knows and how he knew it and what he did with it. in terms of doing it. now, everybody knows that bill spent 53 years at citigroup. now, i've heard over 50, bill, i've heard 55 today, and so we're going to go with over 50. that's a considerable amount of time. and when you think about that time frame and going back, he was a devout disciple of our
late and great chairman of, walter riston. walter, again, when you talk about bill and walter, you talk about icons in this field. now, every single treasury secretary would come to see walter riston. and there were problems in argentina, there were problems in your bay, there was problems in peru, there was problems in brazil, there was problems in mexico, there was problems in jamaica, there was problems in panama, and then we go over here, and there was problems in korea, in japan. then we came over here, and we went back to the european crisis, we went down to south africa where there were problems. and in every case the treasury secretary would come and say, look, walter, i need help. we don't have these kind of people at the treasury. can you offer up somebody, you know, that would understand this
and be able to deal with it? now, walter riston would always say i've got the person. person's name is bill rhodes. but you can't take him. you can only borrow him on that. and so, you know, and here was the fun part, the fun part was every once in a while bill rhodes would go on vacation. and every time he went on vacation it was walter riston who had to call him and tell him, please, come back to new york right away. in all of that. so the joke was -- and it wasn't much of a joke -- was that every time he started talking about going on vacation, people ducked. on this one, because they knew something was coming. and with all the lessons that he has developed and learned and applied to in terms of debt crisis, i'll not name the individual's name, but this one person said there isn't a debt crisis that bill rhodes doesn't
like on that part. [laughter] so, ladies and gentlemen, you know, our treat tonight is to be with bill rhodes and, ladies and gentlemen, the banker to the world. [applause] >> thank you very much, wilbur and terry, for your very kind comments. i should mention that the, actually, the title of the book was the idea of mcgraw-hill, the publisher. [laughter] just to get that straight. and i want to thank the japan society for inviting me to talk about my book, "banker to the world: leadership lessons and the front lines of global finance." i should mention that in the japanese edition i thank the
mof, the ministry of finance x the japanese banks for having been such great supporters of the work i did on sovereign debt restructurings worldwide for over 30 years. couldn't have done it without them. i think wilbur mentioned that i would be talking mainly about europe, but i also have some things to say about japan. we're now in the fourth year, entering the fourth year of the crisis in europe. and it's certainly cast a long shadow. i think it's fair to say that the problems at europe have caused major problems worldwide with the size of that economy including in japan, the united states, china. look at the trade figures worldwide. in 2010 trade grew at -- coming out of the great recession 13.9%. and in 2011 it was 5%, and i
think the final figures for last year, 2012, will be somewhere between 2.5 or 2.7. so it's no wonder that you have the problems you do in major economies worldwide with this slowdown in trade. and i think that, unfortunately, i think that we're going to see a continuation of the problems in europe at least for the most part of 2013, just take a look at the latest figures out of germany which was the strongest economy in the eurozone when they came out. and we have our own problems, as you're aware, here in the united states notwithstanding getting by the immediate crisis at the end of this year on the so-called fiscal cliff. all we managed to do was to put off some of the biggest decisions for another two or tree months. -- three months. so i think, you know, europe has
managed along with little help from ourselves and elsewhere, has managed to cloud the world economy. in the case of japan, i think people are very hopeful with the election who wants to get japan out of what's close to two decades of what you might call a lost period of time. and he's come forth, as you know, with his new stimulus package which is equivalent to $116 billion u.s., ten trillion yen, 2.2% of gdp. a lot of that would go to infrastructure, a lot to the north to the earthquake area, but, of course, we've seen 14 such packages since the late 1990s. and this one has to be different. and also he's pressing the bank of japan. last time i was here was to
introduce governor shirakawa several years ago who i think is a very good governor of one of the major central banks in the world, pressing him to put in more monetary stimulus which i think is necessary. but i, one of the points that was made right in this room several years ago by governor shirakawa, and i've been with him three times in the last two months, is, you know, monetary and fiscal stimulus aren't enough n. the case of japan, you need major deregulation. i think major structural reforms, deregulation in the service area. so, hopefully, that'll all flow into the package of the new prime minister. certainly, a tough job -- it's a tough job, but this is the world's third largest economy, and if we don't get japan moving with some of the other problems with europe, etc., i think the world's in for another couple of
tough years. so, obviously, we wish him the best in that. but it's very important that this not just be fiscal and monetary stimulus, that you also take advantage of the structural reform effort. and i think japan faces, as you all know as well as i do, a number of problems. what is going to be the new energy policy, what's going to be the policy towards nuclear energy, the aging population. i could just run on, territorial disputes with its neighbors in china, korea. so there are a lot of different problems, but i think it's a crisis opportunity situation. the chinese use the expression -- [inaudible] in japanese it's very, very similar, and so i think that the new prime minister is the right person at the right time to take
these steps but not limit them, as i said, to just monetary and fiscal side. so i take advantage to meet all of these other problems and turn them into opportunities. one last point and then i will mention japan at the end of my brief remarks here. my good friend who died a number of years ago, rudy dornbush who was a brilliant economy exist knew japan very well -- economist and knew japan very well from mit, was always concerned that one day the high amount of government debt in japan would catch up to it. over 90% of it is held by japanese. and now, of course, 235% of gdp, the largest of any developed country in the world. and this is something that has to be taken into account as these stimulus programs are pushed ahead, because it's something that japan has got to
deal with sooner rather than later. it's sort of like us with our spending problem here. so i think what are we hooking at -- looking at worldwide? i've mentioned the three largest economies in the world. i have not mentioned china because i've been talking about developed economies. but i think we're looking to the emerging markets 2013 to be very much a driver. and we have a new leadership in china, jinping, li will come in as premier. they will take these posts formally in march, and i'm optimistic based on my knowledge of these two individuals -- particularly xi jinping, and i think what you're going to see there is they're going to open up the economy and the financial sector. i think they'll be freeing interest rates, they'll move more rapidly the convertibility of the rmb and very importantly
and key, they need -- and i think will -- stimulate domestic consumption more. china is too dependent on exports, and this'll mean putting in more of a social safety net to free up savings to help finance this. so i'm optimistic there. we'll have to see, and we won't see -- we'll see a thing here and there along what i'm saying, but the real change, i think, will take place after march, and i think the relationship notwithstanding the territorial disputes between japan and china ing -- [inaudible] for both countries. so i'd like to just put that on the table. if you take a look at where growth is going, the institute of international finance thinks it won't be much better next year than it is this year. they're talking about growth in the order of 2.7% as against
2.5%. so we'll have to see if those figures, in a sense, are correct. but, and those figures are pretty low when you take a look at economic growth. others have much higher figures, as you know. i think it's very important that we see europe move ahead, and the europeans have this idea -- i think they've now been disabused of it -- that because the eurozone was made up of so-called developed countries unlike latin america in the '80s and '90s and asia in the late 1990s that any of the lessons that a lot of the people in this audience learned, you know, from those two crises and other ones in turkey and -- i could run on, east and central
europe -- were not valid for them. because they were so-called developed economies. and so what i thought i would do here is just run through some of the lessons that we learned there that i think, you unfortunately, should have been looked at by the europeans. and they're only now starting to realize that they could have cut down this present negative situation because, let's face it, europe as a whole with a few exceptions is in either recession or stagnation. first, each country is unique and a cookie cutter approach does not work. this is something they didn't want to see. obviously, greece got into a situation by longtime mismanagement on the fiscal side, dragged the banks in. in the case of ireland, it was the banks that dragged sovereign in, much different i. wilbur is an expert on that.
in the case of portugal, and we have some portuguese in the audience here, it was basically a decade of no growth in portugal. in the case of spain, it was a bubble in real estate that was financed by mainly the savings and loan institutions, some of which have gone under, a number have gone under, and a government that basically drove up the deficit and regional governments, because regions are very important in spain also drove up this problem with big deficits. and they weren't attended to. and so in each one of these you have somewhat of a different reason. the case of italy a debt to gdp of over 120% and growing, and the lack of action in trying to do anything about it by the former government. monti came in as a technician
and, by the way, technicians are great, but their period of time is limited because they have no popular support vis-a-vis an election. whether it be greece or italy. and as you know, monti now, there'll be elections in italy, and we'll see how he does. but you need popular mandates to get these changes really through. i'm encouraged in the case of ireland, they're making good progress getting back to the market, but there's still a lot of problems. the latest victim is cypress. the banks held a lot of greek paper. they ran up the deficit there, and so they are the latest bailout case that we're going to see. but each country is different, and can that leads to what is -- and that leads to what is the same, and that's contagion. the europeans did not want to see that there was contagion at the time of greece. and no matter who you talk the to with a few, i think, exceptions, policymakers, they
thought there'd be no contagion out of greece in 2010. well, we know there's been plenty of contagion. and the minister of finance of germany made a statement to a group of us in tokyo at the imf meetings there a couple of months ago. when he was asked what was the biggest mistake you've made so far in the european debt crisis, and he said we did not understand and did not accept the idea of contagion. and, boy, europe's paid for that, and so has the world. and remember, he is the most important finance minister in all of europe, bar none. because germany is the biggest economy. so i think contagion, unfortunately, is alive and well. my friend mario draghi is
talking about positive contagion. i certainly hope that he is right. i think one of the things i learned from my friend paul volcker was, and i learned this early in the 1980s during the latin american debt crisis, is that timing is of the utmost importance. because the longer you take to fix a situation, the worse it gets. and, again, there's been no sense of urgency or timing in europe up til very recently. the feeling was that the policymakers there, politicians had all the time in the world, and we see what that's wrought vis-a-vis the growth or lack thereof in the area. so i think timing really -- and when you announce timelines, you've got to live up to them. and we still don't have important timelines that are being lived up to there. i think another one is if we want a program to succeed in a
country, austerity or better called reform program, we've got to make sure that the local populace of a country supports it. and that was a, that's been a problem day one in a country like greece. i think it's been somewhat percent in portugal, it's better in ireland. but still there have been problems there. and so you've got to get the people's support. and the only way you do that is say this program is going in. of it's a tough program, but it's going to lead to growth. because if you don't have programs leading to growth, the local population in a country will not buy off on it. so i think it's very, very important that we have that. i mean, you take a look at some of the cases which are really, you know, i would say so serious. greece is in its -- right now they're going into their sixth year of recession. this last year probably ended up 6.5, 7% negative growth.
next year they're talking about 4-5% negativing growth. that's not a recession, that's a depression. and you take some of the unemployment figures there, there they have 170% of debt to gdp and growing. so it's very important that you convince the population that growth is there. sixth, i think, obviously, is very important point which is strong political leadership. if you have strong political leadership, you can sell these programs, and you can make them work. but that means you've got to have people running a country, policymakers who believe in structural reforms, privatizations, tax reforms, budget cults, labor -- budget cuts, labor mobility and the need to be competitive both internally and externally. if you don't have governments with plans like that, you're not going to get them back to growth anytime soon. so it's very, very important that you can do that.
seven, the point is the private sector, and i think this is a problem because at the beginning there was no interest in the case of greece and in some of these other countries in involving the private sector. and, in fact, it was only when things got so bad that greece called upon the private sector with the troika which is, as you know, the european union, the european central bank, the ecb and the international monetary fund to really get the private sector involved. and there you had a big haircut. if it had been dealt with earlier, it wouldn't have been as bad, and now they just had to do another debt buyback problem -- operation which is still a problem. so i think the idea of getting the private sector involved early on -- and we showed this both in latin america and asia, asian financial crisis, korea being a good example -- i think, is very, very, i think, important.
so those are the lessons learned from elsewhere that the europeans are now just starting to utilize into the fourth year. but what needs to be done going forward? because that's what really is, i think, important. i think three things need to be done. first of all, you need to get this banking union that's been talked about most of last year actually accomplished. because you need to break the tie between the sovereign and the banks. and you've got to get the banks back lending. and we still don't see that sufficiently in europe. and so you need to get this banking union arranged. originally, it was supposed to be -- i was a questioner on july 26th when mario draghi made the famous historic statement now that he would do everything possible in the ecb to make sure that the euro got through this problem. and i was designated as a questioner to ask him about the banking union. and at that point he was of very
optimistic. he thought the banking union could be worked on and in place in the first quarter of this year. well, now they've moved it to the first quarter, hopefully, of 2014, and you still have arguments over how it's going to be done. so you need to put a timeline on this, and then you've got to adhere to it. but to get the banking system back with similar regulations throughout the eurozone is absolutely necessary. it is key to the recovery of europe. second of all is a plan that he talked about on july 26th in london last year which is the outright monetary transactions, omt, where the ecb would buy bonds from the countries in trouble along with the european stability mechanism under certain conditions. in other words, certain conditionality. now, the ecb isn't going to put
up that conditionality. they've got enough on their as a central bank and now as a supervise for the banks. supervisor for the banks. and it'll probably be the international monetary funneled. but they haven't really agreed what kind of conditionality they're going to put up and who's going to do it. the lead candidate for this should be spain, but the prime minister of spain told me several months ago he'd only go into this program if there was no additional conditionality other than what he was taking, because he thought he was taking enough in spain. and second of all, if the ecb could prove to him by taking this on that the spreads or the cost of issuing bonds would go down significantly. and as you see, nothing's been done there. but psychologically it's helped the market to know that this program is there. but they've really got to make
it work and show exactly what the conditionality's going to be. the next one is a favorite, and i agree with chancellor merkel of germany. and that is you need a fiscal pact, and this was agreed on in march last year. you need 12 of the 17 countries to approve it. ireland was one of the first to approve it in may. and it's very, very important because when you form, when the eurozone was formed, it was formed with a monetary union which was the european central bank, and what they call a mast mastric treaty to limit deficits to gdp to 3%. and guess who were the first two to break it? the two largest members, germany and france. so what an example for the countries in southern europe which can all have broken it. so she is adamant that this fiscal pact go through, and i think she's right. because you cannot move forward
with the eurozone unless you have a fiscal pact to match the monetary union. and a lot of work has to be done on that. but i think these are the three things that are necessary to get the eurozone and most of europe back to growth. .. >> so although it's starting to develop more rapidly because of thanks, and so they key as i said to getting them back to growth is a banking system.
and so all the things i've mentioned here i've are imported. european central bank has put in the ltros, three-year loans at 1%. they did that a year ago. now they've done the only him key. it lessened the amount of collateral messenger to borrow the european central bank, but, the banking system has been shedding assets because it has to raise additional capital. and they have been concentrating on more than lending out forcefully. and a lot of you in this room are aware of that, and some of the benefactors, beneficiaries of this, japanese banks have been buying portfolios and investors on the market. but we've got to get the european bank back to lending. that is ke the key to all of whi said here. then i would just say a few words about, and again, firm timelines to do this.
because if you don't have firm timelines it won't happen, and the markets won't believe. i would just throw in another thing. i, frankly, think that the euro is kind of strong if everyone it to improve your export base. everything at some point in time you've got to get the euro down to vis-à-vis the dollar, today are euro, mainly to help spur exports which will help spur growth, which is exactly what the new prime minister is trying to do in japan. and i think that one of the things i want to mention that he's very, i think is going to push and i think he is very correct, is trade within asia. and he's got to opportunity. what has been there on the table a while and it's clouded by territorial disputes which is the northeast economic asian economic bloc which would be japan, korea and china.
and i think that it's very important that this go ahead with the second and third largest economies and the 10th largest economy, korea, in the world. and he is that he really wants to move ahead on the. and so i really hope so but, of course, it's clouded by this territorial disputes. the other is something, and trade as was mentioned, is a subject that mcgraw has shown tremendous leadership and over the last decade. and we now have something new on the table, not so new was announced almost two new year ago which is a trans-pacific partnership. and i think japan should be part of that. it will take a courageous decision of abe because there's a lot of people entrenched in japan that did not want to be part of that. but i think if you can do the things that we talked about before, you know, he's announced a fiscal stimulus, pushing the bank of japan on the monetary stimulus. if it into the structural reforms i discussed, and push on
these do, northeast economic bloc and japan pacific trade, i think this will be a big help to japan on exports. and as we all know, japan is very dependent on exports and you need to stop hollowing out of industry in japan, moving elsewhere. so i think at the end of the day as we know there are major territorial dispute with china and with korea. and i think, i look favorably, the new prime minister abe sending a representative to korea to talk with madame park, the new president-elect of korea. and hopefully something can be worked out in this area, as you know, the senior delegation led by the outgoing assistant secretary for asian affairs in the state department is
basically in japan and korea right now trying to see if the united states can have a helping hand because that's the u.s. to be allies in the north pacific. the territorial dispute with china is that they going to be much more difficult, but japan asian is one of the biggest foreign investors in china. so it's not just japan the covers on this, also china. some hopeful in -- i'm hoping when president bush and being basically takes over fully in march, that he and prime minister abe can work something out. there's a lot of voices both in china and japan which are very militant, and it's not going to be an easy job. what industry important, and for the united states, this is most important. to get the trade moving and get our allies working together, and
so i tend to be an optimist, like terry. and that's why we worked together at all these trade deals. it was a long, difficult battle on korea and latin american all the others, but at the end of the i think it's worthwhile. i hope we're going to be seen a new dawn in korea in this regard. we have new leadership in china, new leadership in korea, in your leadership in japan it so hopefully they will be able to see some of these things through because i think it's very important, not just for asia, but, frankly, for the world, given what's happening elsewhere, particularly in europe. so having said that, terry, i think we should go and have our little conversation. thank you very much. [applause]
>> here's the book in japanese. well, and the book, bill, is in portuguese, and simplified chinese, korean, and now japanese. i think that, you know, the dissertation just heard from bill, you know, it's so lucid and so straightforward that you sort of, you know, grab this notion of why didn't we start implement on some of these things are and all that. and we seem to get into such publication. and so the first question now, i think that i'd like to ask, and i'll ask a couple of questions and then thrown open, going in the direction anybody wants.
is coming up, because we were talking about the lack of coordination and cooperation in relationship, and the people going it alone, especially in the european crisis and the like. now, you had this long-standing relationship. can you talk a little bit about that relationship? and from the books stempler, who are some of the world leaders that you dealt with that have the most positive influence in terms of relationship development in getting things done? >> well, walter was an internationalist first class. the expanded the city banks in italy over -- is a great friend of japan. used to go to japan regularly, and i think he, along with paul volcker on the public sector side, where major mentors of mind. and so i think it's fair to say, and you've seen this, that
walter was the greatest thinker of his age. and that's what citi is going back to i think at this point in time. we have a lot of present citi bankers, former citibank offers who i know will agree with me. but as far as, you, working with walter come easily got me involved in all of this, and john reed later on, were both i think significant world financial leaders. as far as having talked to a lot of people, i think meeting monday look, having dealt with a number of cases, spend our in 1980 with ago castro. he wanted my advice on how to restructure the cuban debt. and i can speak to you about that because we nationalize in cuba, one of the first things we did was nationalize the foreign banks. then he walks on our resource. we're kind of even here.
certainly, fascinating there. i could run through so many people. one of his sessions with montella, i was asked to tell mr. mugabe, was then president of zimbabwe, and still president of zimbabwe that he used all his time up. and he wasn't very happy with that. and because of that i was able to do that. our secretary of commerce, ron brown, asked me if i would chair the 50 anniversary of the united nations the africa lunch that the u.s. was giving at that time, which i did. he said look, if you can do that, then you can take anything else. so i mean, there've been a lot of people. you mentioned secretaries of treasury here in the united states. certainly the various heads of the fed and central bank who i
think worldwide. and i think one of the things we need to see more of getting to the point that are now you want me to talk about is leadership. we haven't seen the tough leadership in europe that we need to seek to get out of christ. we were very lucky in the case of the lack american debt crisis, that we have paul volcker at the fed, and we had rosier at the international monetary fund. two of the most outstanding people public sector people i have ever known. because the world people forget so long ago, the early '80s, was about to go under, compared, moving deck chairs on the titanic. and that worked out. i think nick brady, with his brady plan, felt we had really real leadership. and i think that's what we're missing in many parts of the world, including europe, where you, although i must say that the ecb, mario draghi have shown
that. but i -- allow the policymakers and politicians have not. and so i think we need to see that worldwide, and we need to see in their own country. i mean, just witness this discussion that went on, whatever you want to call it, at the end of the year. and we have sort of the best to come yet because we had to decide on the debt ceiling and spending. and so this is where we really need leadership, which we were used to. i tend to be an optimist about the united states because people gave up on us on vietnam, on the watergate crisis, and we came charging back. and i think we will do it here, but it would be nice if we didn't have to go to the cliff each time to do it. >> and again, when you start talking about the kind of relationships and the kind of leadership, we still seem to have this atmosphere where people talk more at each other than trying to find some common
ground, some common goal. in getting it done. he approached the whole goal of growth and jobs, and that is the answer to all of this. he also talked a lot about -- we'll sense that if the european situation got worse and they represent 23% of world gdp, the effect that is going to have on the united states, india, brazil, it's going to be real. and so with 40% of exports coming into the united states and so forth, all of the sudden we start to see the effect on the own growth, india's growth, brazil's growth -- >> china. >> and china. now we have another 21% of world gdp, the united states, which is under 2% growth. if we don't resolve some of the debt ceiling and some of spending cuts and get into some of the fiscal order that you were talking about, we are going
to have that wait on us. and even though you proposed a lot of hope with japan in terms of some of the political leadership, they are still at negative growth was 7%. so now you're up to 50% or so of world gdp that is a drag on the economy. how do you look at the broadest sense of contagion as it relates to emerging market growth, developing country growth with 50% of world gdp possibly in a situation? >> i think the trade figures tell it all. whether you agree with the figure on growth or not. i think the trade figures show what's happening. and there's no doubt picking one of the countries you mentioned, china. i mean, china for the last 20 years has been double-digit growth. last year they had one of the worst years in recent memory. we'll see the final figures coming out. it didn't get below 7%.
but when you move from double-digit down to seven something percent, and one of the major drivers of that was their largest export market is europe. and they didn't believe that europe was a, getting into the problem, and b., what take so long to get out of. and, of course, their second largest market is as. so the help of the world out of the great recession might tremendous tennis program. we are not going to see that again in china. so i basically think that you've got to have things worked on energy 20. because theology 20 summit, and i attended two of them, was london, when the world was going into the great depression, not the great recession. they took certain steps to ameliorate that and move ahead to stimulate growth. so i think that this next year is going to be tough. and i think you since complacency in europe. it's interesting that one of the real drivers in brussels is all
the rent. he came out with a statement the other day saying he's concerned about complacency. i think he is right on. he says you of all these people saying everything. you made that comment on july 26. look what the market is. you know, the market could be right but the market could be wrong. and i think that not having been able to do the -- the three things i said with a fixed timeline basically said how long is europe going to be stuck in your? and so i think that this is a real question. you mentioned andy also to india was up eight and a half, 90% growth. brought below 6%. when you have these major world economies with our picks i think you need a good dose of not only fiscal stimulus and monetary stimulus but you've got to back that up with structural reform. and i think deregulation. and i think that's really key
for the world to get out of this problem that it's in today because we both agree, it's all growth and jobs. and if you can't show the path, that's where you use the brady plaintiff because he gave a pathway to growth. korea 1998, king john, he came into power, a man on the left a lasting and wanted to do was to sign and imf agreement, and he told me, he said look, i inherited this, you have my full backing. do whatever's necessary. and who were the first ones to support? japanese bank. first ones. with that i then got the american banks online and european banks online. so there you have the political will to do it. brazil, 1994, country had been in moratorium. i don't know how many restructurings, and he decided enough is enough. as finance minister, and he said
we've got to get this debt deal done. we worked on it, got it done. within hours he announced the readout plan which to brazil out of of hyperinflation, and brazil has had its ups and downs since, but it's a different brazil today than in 1994. and the last example i would give is turkey. in 2001 and my friend who was vice president of the world bank was called in, and i worked with them on that particular plan. so we had to convince the u.s. treasury to support the imf. but he putting reforms, and he told the people, told the people of turkey, look, you have to take this austerity but we will lead you to growth, and he did. look where turkey is, after that. so i just used these three examples. one in the middle east, one in latin america, one in asia where
they be able to do this. and this is an example of leadership to do what's necessary. i mean, n. korea, we've got this done in a couple of months, and four months later, they were raising -- $5 billion in international markets. because they just took a decision and went at it. >> a lot of the things you're talking about, the leadership, political leadership, timing, and the banking union, gave the banks back into lending and the fiscal pact in those components on that part. just as an aside, in talking about another country, russia. you know, russia desperately wants to reproduce itself to the rest of the world. and not in some of the main it has been. they get this opportunity with the g20 coming up in september. crystal ball, do you see
anything from a coordination standpoint from the g20, and -- having out of this? this? and easy russia's image change? >> i think this is a big opportunity for the prime minister to show what could happen in russia. we will just have to see. because they're sitting on all these oil reserves. we know where the price of oil is. but there as you know there's a lot of problems. and so we have to see whether communist, russia can show that it's taking some of these reforms it needs to take. and we will see. and this is a perfect opportunity to do so. so far i think, as i said, the only g20 meeting that really did any thing positive was the one in london. and i give credit to gordon brown. that was his greatest moment i think at that particular time.
do it. no, i mean come effect very organized meetings. i was in korea. there was no one who can organize like the koreans. all they talked about was currency. wars, nothing much came out of it. and then the one in france, it rained the whole time and serve as sort of raining on the parade because it was a disaster and nothing happened. and although the a lot of nice intentions coming out of mexico on the last g20, it's not clear what we're going to see. one of the areas we have got into, i didn't get into here, is this whole question of regulation of financial institutions. this is one of the mandates of the g20, financial stability board and basel but if they don't get this right, and get a level playing field worldwide we will have more regular arbitrage than we had before, and you know, this is a worldwide problem, not just a european problem because here in the united states we have dodd-frank eric in england we have figures.
and then in europe we have the lincoln report. and all sorts of variations. and the whole idea was that the g20 two the financial stability board and also committee were going to come through with a series of amendments and raising capital and liquidity standards on the universal global cooperative basis, coordinated basis, that would avoid what happened in the great recession. so the next one is now worse. but the record is very next. >> let me take a break here and let's open it up. let's start right over here. >> jim, rutgers university. lots of economists, such as your friend, rudy from mit that you mentioned, are believers that competition is the hallmark of a
country thriving and growing, including jobs, et cetera. lots of economists, even before the euro was instituted, argued that they needed europe more competition rather than, what, a coordinated currency, et cetera. and they predicted a bad woes for europe under the euro. you mentioned a lot of the problems on the flipside of competition, namely regulation. give us your perspective in terms of competition regulation in the euro and government
coordination. >> i think it's a very good question. a lot needs to be done there. i think that at the time that the euro was put together, and my good friend, professor at columbia, nobel prize winner, had different views of what it was cold, how is going to work out, and what happened. that was not in his idea book. because you do tremendous regulation there, you need more the regulation. there's no doubt about it. in order to get more competitive, take the case, i keep going back to greece because that's -- when you take a look at the unemployment rate between, you know, 58% of youth between, you know, under 25, it's just incredible. even in the great depression we didn't have that. and overall, unemployment level of 26%. and so you need that all through
southern europe. i must say that victor, the finance minister in portugal when we have a portuguese experts sitting here who is a professor of economics in portugal, has tried to really drive that home, the need for portugal to be more competitive. and they've made a lot of progress there. not enough, but i think one of the things, and i'm hoping we see out of all these countries of the big country, portugal, spain, italy, all of the countries that were mentioned here, that we get more in the way of competitive the. just take a look at france. now, france is the second largest economy in the euro zone. it's very important that you see some of these reforms that are talked about happen. are we going to get france stuck inside nation if not recession? and so i go back, and as i said,
there's a japanese equivalent to a, but the chinese expression -- this is a great opportunity for the europeans to do correctly what they haven't done before. now, whether they will pick up on it we will see, but certainly just like ben bernanke can't solve our problems here in the united states, also mario draghi can't solve the euro zone problems either. so i think the point you are making on competition are key to be worked on at this moment. and you can drive a lot of things now in the euro zone because the economic situation. >> will be very -- will there be a euro in 10 or 20 or? >> i think it will be tha but yu can question to the members will be. i think obviously in the case of greece, nobody wants to do anything because you've got elections coming up in germany
with chancellor merkel, everyone wants to hold it together. but at the end of the day it's going to very much depend on whether greece can implement the programs they have agreed to. and i think there will be a euro. the question is what will it look like and what the membership will be. originally there was a big school of thought sank the euro should avenge his the northern tier of the membership. it should have taken in this so-called southern tier, countries that have problems. and the next year or two i think they will really see -- this idea complacency, and i've had some talks, he was good enough to buy my book last year and read it, and we discussed it. i was with him a month ago, and i think he's one of the more thoughtful people in the bureaucracy in brussels. and i think that when he starts talking about complacency, and i should say younger came out also and talked about his concern on the value of the euro, these are the the dollar, on exports.
so i think we're very far from where a lot of members of the marketplace are, you know, the worst is over for europe, don't worry, it's just a matter of time. >> [inaudible] >> microphone. >> did everyone hear that question? >> to the uk make the right decision in not being a member? >> well, the prime minister at the time certainly thinks so. and as you know, cameron and osborne, the young man to raise of his, so you can argue that back and forth at this particular point in time. the question is, if you have a referendum in the uk today, which upon that have for another couple of years, what would the vote be? and most all think it would be to pull out if it's not some sort of restructuring of uk's
role. certainly without the uk, eurozone can continue to exist. i think chancellor merkel certainly wanted to keep in the eu, because they haven't went into europe zone but they are an active member of the eu. she wants to keep them in. >> time is getting a little tight so let's go to questions very quickly. right here and then right over here. >> if you would, enhance economic opportunities in asia, more asian members of congress. >> that's an interesting thought. of course, you had some very senior members of congress, in fact the senior senator just died, senator inouye, wh who had tremendous clip it and you're seeing more and more asian members elected, male and female. and i think you will continue to see that. you